Standard deviation of the damage, Econometrics

Assignment Help:

In a year, weather can impose storm damage to a home. From year to year the damage is random. Let Y be the dollar value of damage in a given year. Assume that 95% of the year's Y=$1,000, and 5% of the years, Y=$15,000.

a. Calculate the mean and standard deviation of the damage in any year.

b. Consider an 'insurance pool' of 100 sufficiently dispersed homes, which implies the damage to dissimilar homes can be viewed as separately distributed as random variables. If ? is the average damage to those 100 homes in a year, (i) what is the expected value of the average damage? (ii) What is the probability that ? exceeds $2000?

 


Related Discussions:- Standard deviation of the damage

Determine the interest rate, Assume that Jane spends her entire income of $...

Assume that Jane spends her entire income of $100 on two goods,  x  and  y.  Moreover, these goods are perfect complements for her.  Let the price of good  x  go up while the price

Coefficient estimators and R squared, Using a sample of 545 full-time worke...

Using a sample of 545 full-time workers, a researcher is interested in the question whether women are systematically underpaid compared to men. First, the researcher estimates aver

Multicollinearity, if there is multicollinearity so why we can not estimate...

if there is multicollinearity so why we can not estimate the value of parameters?

National park , A chance sample of visitors to a National Park was intervie...

A chance sample of visitors to a National Park was interviewed regarding their impressions of the Park.  Of 200 interviewees, 120 said that they would probably make a return visit

Equilibrium conditions for three related markets , The equilibrium conditio...

The equilibrium conditions for three related markets are given by:  (a)Write this system of equations in matrix notation of the form  Ax = B.  (b)  Find the determinant

Diagnostic test, explanation on diagnostic test in time series

explanation on diagnostic test in time series

Portfolio maximization , Derive marginal benefit of reducing principal bala...

Derive marginal benefit of reducing principal balances

European chemical industry, Show which of the following are cross-section d...

Show which of the following are cross-section data, giving the reasons. (i)    Wages of individual workers in the UK chemical industry in 2009. (ii)    Annual growth rates of eve

#title.Structural Variance Auto Regression, Can you explain the basic intro...

Can you explain the basic introduction of this methodology?

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd